YOU have graduated from Deakin with a Bachelor of Commerce and started work with a mid-sized accounting practice in Melbourne, working in the Accounting and Tax team. Standards are high. To move ahead in your career you must not only work hard and effectively you must also demonstrate cultural fit. This was easy during recruitment as the firm promoted itself as “top class people, doing top class work, with top class standards”. You were expecting that the firm would do all it could to win and serve its clients. There is huge stigma attached to being held responsible for losing a client. One of the clients in your team runs a successful business. However, he was very unhappy when presented with a tax bill of over $1 million. Your supervisor spent a considerable amount of time trying to help the client see that tax is paid on profits and that profits are a sign of success. The client was only partially persuaded. His clear instructions to your supervisor are to lower his tax bill, “make it happen, or I will find someone who will” were his final words. The client’s business has grown an extra 10% this year. Meanwhile, the client has planned a major expansion that will take the business to global markets. All the spare cash of the business has been invested in the expansion. Bank loans have also been raised to fund the expansion. Your primary task is cash flow planning, which includes current operations, tax payments and the expansion project. A successful outcome will turbo-charge your career. At an accounting conference you meet Jen, the Business Development Manager for a tax planning specialist. She outlines an investment scheme where clients borrow from the scheme promoter who invests the money in infrastructure projects around the world. Clients can claim a tax deduction for interest on the borrowing in the early years. This will reduce their tax. Project revenue is taxable when the projects become operational, several years into the future. Investors enjoy immediate tax benefits. Jen adds “investors don’t actually have to invest cash up front. All we need is a guarantee to pay cash ‘if and when required’. We take the guarantee to a bank who will provide project funding. If there is a problem the bank takes over the project. Investors are only called on if the project does not manage to pay out the bank loan. In over 20 years of promoting these schemes this has never happened”. She adds, “the beauty of this scheme is that investor get to choose the size of their tax saving. The bigger the guarantee they sign up for, the bigger the tax saving”. You do some calculations and establish that for every $100 guarantee your client provides to Jen’s investment scheme he will get a $50 benefit. In a stroke you could reduce his tax bill and free up funds to complete the expansion. 

Use ONE of the decision-making models to reach and justify a responsible ethical judgment in terms of what you ought to do in this situation.
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Answer rating: 100% (QA)

SOLUTION As per AAA ethical decision making model the following represent the justification in arriving at a responsible ethical judgement using the first person response Facts of the case As per the ... View the full answer